Which of the following costs is irrelevant in making a decision about a special order price if some of the company facilities are currently idle?
A)direct labor
B)equipment depreciation
C)variable cost of utilities
D)opportunity cost of production

Question

Quizplus · Accepted Answer

Equipment depreciation is an indirect cost and should not be considered in the decision-making process regarding special order price if some of the company facilities are currently idle. The relevant cost in this scenario would be only the direct materials, direct labor, and variable costs of utilities involved in fulfilling the special order. The opportunity cost of production should also be considered as it measures the cost of forgoing the next best alternative use of the idle facilities.

Which of the Following Costs Is Irrelevant in Making a Decision